Senior Managers Regime Impact on Industry: Survey Results | GBAF

The Senior Managers Regime (SMR) has already had a positive impact on the financial services sector, despite making the day-to-day jobs of compliance staff more difficult, according to senior UK financial crime professionals polled by LexisNexis® Risk Solutions. The survey of nearly 200 professionals shows that 71% of respondents believe the SMR has had a positive effect on the industry. Investment bankers were particularly positive about its impact, with 81% from very large investment banks agreeing that it has positively influenced the investment banking community.

The survey also found that 75% of respondents believe the SMR has had a positive impact on their firms’ appetite for risk, and 63% agree it has improved collaboration between business and compliance units.

Despite this, the survey found that 60% of senior financial crime professionals believe that the SMR has made their job more difficult – but just 9% say it has created more stress.

The 2017 research marks a change in attitude from when financial crime professionals were polled on the impact of personal liability in 2015. In a survey commissioned by LexisNexis® Risk Solutions for its Future Financial Crime Risks 2015 report, 50% of professionals believed the then incoming SMR would make their job more stressful. However, today it is still clear there are concerns about how increased levels of personal liability have affected recruiting efforts for compliance roles. 23% of respondents working at large investment banks today believe the SMR has made it more challenging to hire staff for positions in which they will be held liable.

In addition, there are still some financial crime professionals who would choose another career path as a result of increased regulatory pressure. Since the implementation of the SMR, more than a third (35%) of respondents say they would leave the industry if the opportunity arose. However, this has reduced significantly from 2015, when more than half (54%) of respondents said, given the opportunity, they would choose another career path in light of the increased personal liabilities.

Dean Curtis, Managing Director at LexisNexis® Risk Solutions, comments:

“Broadening the scope of personal accountability within banks has clearly had a positive effect, and the FCA extending the regime to cover all financial services will likely extend these benefits. In truth, financial crime professionals have always been highly accountable – but by making other ‘front line’ senior individuals just as accountable, the SMR has enhanced the compliance culture and improved communication and collaboration across different service lines. As a result, issues raised by Money Laundering Reporting Officers (MLROs) that impact compliance fall on more sympathetic ears. Increased personal liability has therefore not only fundamentally shifted corporate mentalities, but also improved day-to-day processes in many banks.

“However, there is clearly still pressure to resource experienced financial crime professionals. Whilst the introduction of the additional regulation such as the SMR has caused fewer professionals to consider leaving their jobs than previously feared, it is becoming a barrier to hiring for such positions. With limited talent available, and with work for financial crime departments growing every day, the industry needs to find a way to resource more well-trained financial crime professionals.”

The Senior Managers Regime (SMR) has already had a positive impact on the financial services sector, despite making the day-to-day jobs of compliance staff more difficult, according to senior UK financial crime professionals polled by LexisNexis® Risk Solutions. The survey of nearly 200 professionals shows that 71% of respondents believe the SMR has had a positive effect on the industry. Investment bankers were particularly positive about its impact, with 81% from very large investment banks agreeing that it has positively influenced the investment banking community.

The survey also found that 75% of respondents believe the SMR has had a positive impact on their firms’ appetite for risk, and 63% agree it has improved collaboration between business and compliance units.

Despite this, the survey found that 60% of senior financial crime professionals believe that the SMR has made their job more difficult – but just 9% say it has created more stress.

The 2017 research marks a change in attitude from when financial crime professionals were polled on the impact of personal liability in 2015. In a survey commissioned by LexisNexis® Risk Solutions for its Future Financial Crime Risks 2015 report, 50% of professionals believed the then incoming SMR would make their job more stressful. However, today it is still clear there are concerns about how increased levels of personal liability have affected recruiting efforts for compliance roles. 23% of respondents working at large investment banks today believe the SMR has made it more challenging to hire staff for positions in which they will be held liable.

In addition, there are still some financial crime professionals who would choose another career path as a result of increased regulatory pressure. Since the implementation of the SMR, more than a third (35%) of respondents say they would leave the industry if the opportunity arose. However, this has reduced significantly from 2015, when more than half (54%) of respondents said, given the opportunity, they would choose another career path in light of the increased personal liabilities.

Dean Curtis, Managing Director at LexisNexis® Risk Solutions, comments:

“Broadening the scope of personal accountability within banks has clearly had a positive effect, and the FCA extending the regime to cover all financial services will likely extend these benefits. In truth, financial crime professionals have always been highly accountable – but by making other ‘front line’ senior individuals just as accountable, the SMR has enhanced the compliance culture and improved communication and collaboration across different service lines. As a result, issues raised by Money Laundering Reporting Officers (MLROs) that impact compliance fall on more sympathetic ears. Increased personal liability has therefore not only fundamentally shifted corporate mentalities, but also improved day-to-day processes in many banks.

“However, there is clearly still pressure to resource experienced financial crime professionals. Whilst the introduction of the additional regulation such as the SMR has caused fewer professionals to consider leaving their jobs than previously feared, it is becoming a barrier to hiring for such positions. With limited talent available, and with work for financial crime departments growing every day, the industry needs to find a way to resource more well-trained financial crime professionals.”